Phyllis Rothschild, Jag Duggal, and Richard Balaban

PLEASE NOTE
The Mercer Management Journal is dead. If you click through you will be taken to the Internet Archive site to find an archived copy.

Many strategic planning processes devolve into sterile budgeting exercises focused on yearly or even quarterly financial minutiae rather than looking at the broader market landscape. This is like driving while looking at the speedometer and odometer, not the road ahead; come the next curve, a crash is inevitable. The company fails to anticipate changes in customer priorities and the competitive landscape, and it ends up with merely incremental performance improvements or, worse still, with desperate rounds of cost-cutting.

By requiring all aspects of strategy to be quantified, budget-oriented processes tend to be burdensome and misleading. Despite the apparent precision, few people believe the numbers and the exercise becomes a political game. In order to meet budget or Wall Street expectations, line managers make unrealistic assumptions that are rarely examined. Forecasting the budget or expected numbers gets managers in and out of strategy review sessions with a minimum of debate about the assumptions.

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